So, if these rules are being applied, the job of the credit controller should either be to review the amount of the line of credit, the customers risk category or the tolerance allowed.
If this important task is not completed on a daily basis in favor of releasing individual orders, then the problem will persist and what is even worse, the number of orders will eventually get out of control.
The function of management is to ensure that proper controls are in place and in my experience this is not always the case. In fact some don’t even keep logs of what orders were released or why. Anytime you constantly override your system you are losing control.
To maintain control of your exposure you have to have rules and stick to them. Of course there is a need for some flexibility in certain circumstances and credit control usually involves applying common sense in every situation. There are good reasons and downright lies and the role of the Credit Professional is to be able to differentiate between.
It is only when things go wrong, when a business closes or a company goes into liquidation that the senior management comes looking for answers and explanations. If an account goes with a balance exceeding the signed off line of credit then all concerned have very serious questions to answer.
My advice for what it is worth, spend less time dealing with the symptoms of a problem by constantly releasing orders and more time tackling the root cause and making better decisions every time. The alternative can be very expensive.